The Phoenix-like Rise of the Solana Project: A Token that Defied the Odds
Solana (SOL) has emerged as the top-performing digital asset among the top 10 cryptocurrencies by market capitalization. This rapid growth comes after a significant decline, but what factors contributed to Solana’s success?
In contrast to Ethereum (ETH), which saw a 90% increase, Solana experienced exceptional success in 2023. To understand the scale of Solana’s ecosystem and its recovery pace, let’s analyze key blockchain metrics from the time of the FTX crash on November 11, 2022.
When FTX, a cryptocurrency exchange, filed for bankruptcy last year, Solana’s metrics had already significantly dropped from their peak values. For example, SOL’s price fell from $62 to $17, and the daily trading volume decreased from $6.7 billion (108 million SOL) to $2.2 billion (130 million SOL).
The departure of a major investor and the risk of coin sales triggered Solana’s fall, leading many in the crypto community to predict its imminent demise. Solana’s co-founder and CEO, Anatoly Yakovenko, acknowledged the significant decline in SOL resulting from the FTX collapse but emphasized the damage caused to ecosystem projects.
Around 20% of Solana-based projects had received investment from FTX or its subsidiary Alameda Research, and only 5% of startups in the ecosystem held funds on this trading platform. Yakovenko expressed sympathy for the project creators who trusted FTX as the custodian of their funds.
Despite the negative forecasts, Solana managed to survive and began its recovery. Experts attribute this “survivability” to the team’s use of stress testing to fix bugs. Solana’s active growth coincided with the publication of the court decision in the FTX case, where Sam Bankman-Fried, the founder of FTX, was found guilty of all charges.
Now free from the pressure of a powerful partner, Solana’s future looks promising, increasing its investment appeal. The crypto industry has started discussing Solana’s potential to lead the next bull market, as reflected in the high volume of open long positions, indicating investors’ confidence in its positive trajectory.
Despite the decline in network activity following FTX’s bankruptcy, Solana developers have remained proactive. The blockchain has undergone significant technical updates and innovations throughout the past year. New defi services, including lending platforms, LSD protocols, and decentralized exchanges (DEX), have been introduced to create a new generation of platforms with “healthy” tokenomics and high-quality user interfaces.
The migration of validators to client version 1.16 optimized memory usage, expanded support for zero-knowledge proofs (ZKP), and integrated confidential transfers with the new token standard. Another major improvement was the introduction of State Compression, which made storing data outside the main network cheaper by using on-chain hashes to prove its authenticity.
The end of the year witnessed notable excitement surrounding Solana-based memecoins, with Bonk being one of the standout tokens. Bonk, a meme coin operating on the Solana blockchain, gained attention due to the increase in the Solana blockchain token’s value. The demand for the rising token value resulted in a tenfold surge in Saga smartphone sales by Solana developers, as individuals owning the device were eligible for a complimentary distribution of BONK tokens.
Looking ahead, analysts from VanEck have presented several forecasts for the price of SOL by 2030. The most optimistic scenario projects a coin price of $3211.28, while the pessimistic scenario predicts $9.81. Experts believe Solana has the potential to accommodate applications with over 100 million users and anticipate decentralized exchanges’ market share to reach an all-time high.
Although the initial forecast may seem challenging to achieve given current token values, Solana has already secured its place in the top five cryptocurrencies by market capitalization, surpassing Ripple (XRP) and BNB. With its continued growth and development, Solana could become a major player in the crypto market.
